Published on October 12th, 2007 | by Stephanie Evans3
The Positive Benefits of Fair Trade
Fair trade practices are designed not just to promote profit, but also to encourage better standards for an improved quality of life, specifically in developing countries. Fair trade practices address issues of wages, the environment, respect for existing cultures, and corporate accountability.
Coffee serves as an example of the problems with our current Free Trade system and allow us to see the potential of Fair Trade. Under the current system, free trade coffee will go through up to ten steps by the time it reaches the market for the consumer to purchase. Let’s look at some of the energy consumed in this excessive change of hands:
- The coffee begins on the farm and from there it is sold to a middleman.
- The middleman then sells the coffee to a transformer, who sells it to an exporter, who then sells it to a broker.
- The broker finds an importer and the importer sells the coffee to a coffee roaster.
- The coffee is then sold it to a distributor and from there it get sold and makes its way to a market, where we purchase the coffee.
As you can see, there are many steps in the process and a great deal of the profit is toward the back end of the transaction. In fair trade, the desire is to increase the profit margin for the person or people who actually produce whatever is being sold. The way of achieving this is by eliminating some of the steps involved.
With fair trade coffee, the steps are fewer and less involved than our current processes:
- The coffee is sold into a cooperative and from there, directly to an importer.
- The importer finds a roaster, who finds a retailer, who then finds us, the consumer.
Fair trade practices took this process from 10 steps to 6, which in turn increases the profit for the producer of the coffee.
Fair trade practices also promote environmental regulations. In many developing nations, environmental regulations are not as stringent as they are in the United States or Europe. This fact impacts cost of production, making it less expensive, but in the process it can do serious damage to the environment of the developing nation. Fair trade supporters want foreign governments to promote the same environmental standards in the developing world as they do in their own countries.
Remember developing countries, are "developing," and their industry will continue to grow. Lax environmental standards not only affect them, but have long term effects for everyone on the planet.
Currently there are organizations working on fair trade labeling that informs consumers whether or not the producer of the product is following fair trade practices. For more information you can start at www.fairtrade.net/standards.html or www.fairtrade.org. Or simply enter "fair trade" into your computer’s browser.